Invest and making Money is so easy and simple! Making a toast to life, passion and health, and remember our good fortune and wealth.

Sunday, March 27, 2011

Buy a business with reasonable price

As long as there's profit, you will not go bankrupt. This is the only way to survive in any business, similar for business buyer. The business you buy or planing to buy must be able to generate better return than cash, if not, why bother about invest in the business, isn't it more safer to put money in bank to earn interest? Hence, the reasonable return of any investment should be able to generate at least 3 times Fix Deposit can provide.

Buying a business, we may want to ask how much the return can we obtain per year after deducted the expenses. Use the profit figure divided by the principal, we will get to know how much of return in percentage per year. Today, if we are not buying the whole business, instead buying a few shares of the company, it work the same way.

I came to know a company, Mithril, listed 7 years ago, never seem to make any positive income, every year incurred losses. The boss should close down the business, better put money in bank, where can earn some 3% of interest every year. Wonder why still a lot of people willing to buy this stock everyday, the price is 6 cent now. If anyone still want to buy Mithril, I think it's better to buy it's loan stock, Mithril-LA, it will mature next year, having 1.5 times securities value, hence no need to worry if the company can not repay full value of RM0.78 plus 3% for 2 years.

About Me

The stock markets never changes, because of greed, people chase to buy and cause the high price go even higher. At time, because of fear, people sell like tomorrow is hopeless and cause the low price become lower and lower. It happened before and will happen again. It's just a question of WHEN.
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You can create your own wealth, provided you are serious, passion, discipline and willing to learn the skill!
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This blog is for purpose of sharing investment info only. It's not for intention of speculate to buy or sell of any stock. Do make your homework and plan properly before invest in stock market.